Easing Middle East tensions boost risk sentiment, lifting the Australian Dollar as traders await key US jobs data this week.
The AUD/USD pair climbed to 0.7020 in early European trading Tuesday, supported by optimism over potential US-Iran negotiations. Reports of talks aimed at easing tensions in the Strait of Hormuz have improved market risk appetite, benefiting risk-sensitive currencies like the Aussie.
The Reserve Bank of Australia remains hawkish despite softer inflation, with Governor Michele Bullock warning that underlying price pressures remain elevated. Markets are fully pricing in one more RBA rate hike this year, which would push the Official Cash Rate to 4.60%. Attention now turns to Australia’s upcoming Trade Balance data and Friday’s US July employment report.
Traders are closely watching the US jobs data for clues on the Federal Reserve’s next policy move. Stronger-than-expected figures could reinforce expectations for further Fed tightening, potentially influencing USD strength.